Mortgage and refinance rates today, December 3, 2020

Peter Warden
The Mortgage Reports editor

Today’s mortgage and refinance rates 

Average mortgage rates inched higher yesterday, canceling out Tuesday’s equally small fall. And conventional loans started out this morning at 3.063% (3.063% APR) for a 30-year, fixed-rate mortgage. 

Today’s a tough day to call mortgage rates. First thing, a holding steady or small fall looked likely. But if hope for a stimulus package strengthens during the day, those rates could go noticeably higher. Still, Freddie Mac just called a record low (though read on for a caveat).

Find and lock a low rate (Dec 3rd, 2020)

Current mortgage and refinance rates 

Program Mortgage Rate APR* Change
Conventional 30 year fixed
Conventional 30 year fixed 3.063% 3.063% +0.44%
Conventional 15 year fixed
Conventional 15 year fixed 3.063% 3.063% +0.56%
Conventional 5 year ARM
Conventional 5 year ARM 3% 2.743% Unchanged
30 year fixed FHA
30 year fixed FHA 2.938% 3.919% Unchanged
15 year fixed FHA
15 year fixed FHA 2.125% 3.065% Unchanged
5 year ARM FHA
5 year ARM FHA 2.5% 3.239% +0.01%
30 year fixed VA
30 year fixed VA 2.875% 3.053% +0.06%
15 year fixed VA
15 year fixed VA 2% 2.319% Unchanged
5 year ARM VA
5 year ARM VA 2.5% 2.419% +0.01%
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions here.
Find and lock a low rate (Dec 3rd, 2020)

COVID-19 mortgage updates: Mortgage lenders are changing rates and rules due to COVID-19. To see the latest on how coronavirus could impact your home loan, click here.

Should you lock a mortgage rate today?

Average mortgage rates are very close to all-time lows. And, if you look only at those for purchase mortgages (as opposed to refinances), they’re already there.

So locking now makes a lot of sense, regardless of when you’re going to close. True, you risk missing out on the possibility of some small gains. But you get to put the stress of picking your moment behind you.

However, personally, I’d wait to lock until I was two or three weeks off closing. Because I suspect there are more falls than rises ahead.

However, we’re probably not looking at enormous gains from waiting. And you might very sensibly think they’re not worth the risk of my turning out to be wrong.

See “Are mortgage and refinance rates rising or falling?” (below) for more. Meanwhile, my personal rate lock recommendations are:

  • LOCK if closing in 7 days
  • LOCK if closing in 15 days
  • FLOAT if closing in 30 days
  • FLOAT if closing in 45 days
  • FLOAT if closing in 60 days

But with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So be guided by your gut and your personal tolerance for risk.

Market data affecting today’s mortgage rates 

Here’s the state of play this morning at about 9:50 a.m. (ET). The data, compared with about the same time yesterday morning, were:

  • The yield on 10-year Treasurys fell to 0.93% from 0.95%. (Good for mortgage rates) More than any other market, mortgage rates normally tend to follow these particular Treasury bond yields, though less so recently
  • Major stock indexes were mixed and barely moving on opening. (Neutral for mortgage rates.) When investors are buying shares they’re often selling bonds, which pushes prices of those down and increases yields and mortgage rates. The opposite happens when indexes are lower
  • Oil prices were effectively unchanged at $45.03, up from $44.87 a barrel. (Neutral for mortgage rates* because energy prices play a large role in creating inflation and also point to future economic activity.) 
  • Gold prices were up at $1,838 from $1,819 an ounce. (Neutral for mortgage rates*.) In general, it’s better for rates when gold rises, and worse when gold falls. Gold tends to rise when investors worry about the economy. And worried investors tend to push rates lower
  • CNN Business Fear & Greed index — Higher at 85 from 84 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are better than higher ones

*A change of less than $20 on gold prices or 40 cents on oil ones is a fraction of 1%. So we only count meaningful differences as good or bad for mortgage rates.

Caveats about markets and rates

Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. The Fed is now a huge player and some days can overwhelm investor sentiment.

So use markets only as a rough guide. They have to be exceptionally strong (rates are likely to rise) or weak (they could fall) to rely on them. But, with that caveat, so far they’re again looking quiet for mortgage rates today.

Find and lock a low rate (Dec 3rd, 2020)

Important notes on today’s mortgage rates

Here are some things you need to know:

  1. The Fed’s ongoing interventions in the mortgage market (way over $1 trillion) should put continuing downward pressure on these rates. But it can’t work miracles all the time. So expect short-term rises as well as falls. And read “For once, the Fed DOES affect mortgage rates. Here’s why” if you want to understand this aspect of what’s happening
  2. Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read How mortgage rates are determined and why you should care
  3. Only “top-tier” borrowers (with stellar credit scores, big down payments and very healthy finances) get the ultralow mortgage rates you’ll see advertised
  4. Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the wider trend over time
  5. When rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
  6. Refinance rates are typically close to those for purchases. But some types of refinances from Fannie Mae and Freddie Mac are currently appreciably higher following a regulatory change

So there’s a lot going on here. And nobody can claim to know with certainty what’s going to happen to mortgage rates in coming hours, days, weeks or months.

Are mortgage and refinance rates rising or falling?

Today

Today, I’m expecting another quiet day for mortgage rates. But it could turn out to be lively — and not in a good way — if politicians make real progress toward agreeing on a stimulus package.

I’m expecting falls to outweigh rises for months to come. And that, in turn, is because I’m anticipating sustained damage from the COVID-19 pandemic at least until the middle of next year and possibly for longer.

Yesterday was another grim day for the country with record highs for COVID-19 deaths and hospitalizations. And lifesaving measures to contain the coronavirus’s spread inevitably have bad consequences for the economy.

Yes, this morning’s weekly number for new claims for unemployment insurance wasn’t as bad as widely feared. But few expect good news from tomorrow’s monthly employment situation report.

All this is terrible for everyone. Except for those who want lower mortgage rates. Because such circumstances typically pull those downward.

Possible future threat?

You need to be aware of a possible future threat to low mortgage rates. That’s an announcement due on Dec. 16 that will follow a meeting of the Federal Open Market Committee (FOMC), which is the Federal Reserve’s policy body.

We already know that the FOMC discussed reviewing its purchases of mortgage-backed securities (the bonds that actually determine mortgage rates) at its last meeting. And if it decides to stop or significantly reduce those purchases, mortgage rates could rise that day and thereafter, perhaps sharply. Indeed, if enough investors believe a policy change is likely, rates might begin to rise before the announcement.

Personally, I think the FOMC is unlikely to sacrifice the main bright spot (the housing market) in the current gloom. But others are concerned. And you should know of this threat.

Recently

Over the last few months, the overall trend for mortgage rates has clearly been downward. A new all-time low was set during each of the weeks ending Oct. 15 and 22 and Nov. 5 and 19 according to Freddie Mac. And today it declared a record low.

However, note that Freddie’s figures relate to purchase mortgages alone and ignore refinances. And if you average out across both, rates have been consistently higher than the all-time low since a record set in early August, though they’re close now. The gap between the two has been widened by a controversial regulatory change.

Expert mortgage rate forecasts

Looking further ahead, Fannie Mae, Freddie Mac and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.

And here are their current rates forecasts for the last quarter of 2020 (Q4/20) and the first three of 2021 (Q1/21, Q2/21 and Q3/21).

But note that Fannie’s (released on Nov. 17) and the MBA’s (also Nov. 17) are updated monthly. However, Freddie’s are now published quarterly. And its latest was released on Oct. 14.

The numbers in the table below are for 30-year, fixed-rate mortgages:

ForecasterQ4/20Q1/21Q2/21Q3/21
Fannie Mae2.8%2.8%2.8%2.8%
Freddie Mac3.0%3.0%3.0%3.0%
MBA2.9%3.0%3.0%3.2%

So predictions vary considerably. You pays yer money …

Find your lowest rate today

Some lenders have been spooked by the pandemic. And they’re restricting their offerings to just the most vanilla-flavored mortgages and refinances.

But others remain brave. And you can still probably find the cash-out refinance, investment mortgage or jumbo loan you want. You just have to shop around more widely.

But, of course, you should be comparison shopping widely, no matter what sort of mortgage you want. As federal regulator the Consumer Financial Protection Bureau says:

Shopping around for your mortgage has the potential to lead to real savings. It may not sound like much, but saving even a quarter of a point in interest on your mortgage saves you thousands of dollars over the life of your loan.

Verify your new rate (Dec 3rd, 2020)

Mortgage rate methodology

The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.